The question of how to make your iframe fit 100% of your content (using JavaScript) has been answered on the forum already... for iframes displaying content from the sam
(My answer to a similar question)
It is not possible to do this without some control over the page being iframed because of the browser's security model. If it was possible, that would be a security problem and would have to be fixed.
Although letting the embedding site know the height of a third party webpage when embedded in the page seems harmless, this can leak information to the embedding site that the browser's user wants to keep private. For example, http://www.facebook.com/ renders differently depending on whether or not you are logged in, so if my website can work out the height of then I can work out whether or not you are a facebook user, something you probably don't want me to know.
The information leakage would be similar to the infamous CSS History Leak which browser vendors had to plug.